Froma Harrop: Most see a need for higher taxes

Poll after poll shows that the American people want higher taxes. That’s not the same as liking higher taxes. The people have simply concluded that higher taxes are preferable to the alternative so vividly portrayed in the Republican plan to do away with government guarantees in Medicare.

And Republicans don’t even have that ugly option to offer anymore. After voters in western New York rioted over it by handing a formerly safe GOP congressional seat to a Democrat, many Republicans have been jumping ship. Odd that House Speaker John Boehner continues to sail on with nothing in the hold but a vague threat to let America default on its debt if … if what? If Democrats refuse to make the drastic spending cuts Republicans are afraid to push.

What do the American people think? A Quinnipiac poll found that 69 percent, including nearly half of Republicans, want taxes raised on households making more than $250,000. A later Ipsos/Reuters polls shows three-fifths wanting to raise taxes to cut the deficit.

When President Barack Obama recently urged Republicans to accept some tax increases as part of a deficit-cutting deal, the ship stayed dead in the water. “The American people know tax hikes destroy jobs,” Boehner stated.

Is that so? Perhaps the people remember that in 1993 President Bill Clinton signed a tax increase that helped set off an economic boom and job bonanza. Why? America had shown a willingness to start paying its bills, and investors responded with enthusiasm. In this case, higher taxes created jobs.

Clinton left a budget surplus that his successor, George W. Bush, quickly squandered with tax cuts. Even then, polls showed public support for them only on the understanding that the surpluses would continue. They famously did not.

Today, high-tax Sweden has only 7 percent unemployment, while ours is 9 percent. How come? Before the 2008 economic meltdown, Sweden prudently maintained a budget surplus equal to 3.6 percent of its economy. Bush’s America was running a 3 percent deficit.

So guess which country was better prepared to weather the deep recession that followed? In the recent first quarter, Sweden’s economy expanded at an annual rate of 6.4 percent, while ours grew a mere 1.9 percent. Meanwhile, no one in Sweden is threatening the health care security of anyone, much less the elderly.

Offering no serious deficit plan that the public can stomach, what Republicans have left is a political plan. Here’s how it goes:

After the 1993 tax hike, Democrats suffered grievously at the polls. Though other factors were involved, Republicans pounded them on the tax increase, despite its affecting only high-income households. At the same time, they hearkened back to Ronald Reagan’s famous tax cuts, even though the Gipper had also raised taxes 11 times, and still, the national debt doubled during his two terms.

Republicans also recall the beating President George H.W. Bush took from the party’s anti-tax cultists after he broke his pledge, “Read my lips, no new taxes.” That raising taxes was the responsible thing to do back then did the elder Bush little good.

Many voters who bought the voodoo that tax cuts automatically pay for themselves, and more, are older now, and some are wiser. America must curb spending for sure, but clearly no tolerable path away from the deficit cliff can skirt the revenue side – especially when federal tax collections (relative to the gross domestic product) are the lowest they’ve been in 60 years.

The Good Ship Tax Cut has run its last cruise. The hard fiscal realities are getting harder to ignore, prompting even recovering tax-a-phobes to take a sedative and say, “Yes, new taxes.”